BIS final rule expands end use/user and licensing in Russia, China, Venezuela
/On April 28, 2020 the Department of Commerce, Bureau of Industry and Security (BIS)(1) published a final rule (the “Rule”)(2) that amends the Export Administration Regulations (EAR) to expand license requirements on exports, reexports, and transfers (in-country) of items intended for military end use or military end users in the People’s Republic of China (China), Russia, or Venezuela.
Summary
The Rule:
Expands the licensing requirements for China to include “military end users,” in addition to “military end use”;
Broadens the list of items for which the licensing requirements and review policy apply;
Expands the definition of “military end use"(4);
Creates a new reason for control and the associated review policy for regional stability for certain items exported to China, Russia, or Venezuela; and
Adds Electronic Export Information (EEI)(5) filing requirements in the Automated Export System (AES)(6) for exports to China, Russia, and Venezuela.
Details
The Rule expands license requirements for exports, reexports, and transfers (in-country) of items intended for military end use or military end users in China, Russia, or Venezuela by expanding the requirement in 744.21(7) of the EAR to include military end users in China. “This expansion will require increased diligence with respect to the evaluation of end users in China, particularly in view of China’s widespread civil-military integration.(2)”
In addition, the Rule adds items to the list of those subject to license requirements in 744.21 subject to the military end-use and end-user license requirements in Supplement No. 2 to part 744.(8) The Rule adds the following ECCNs in the categories of materials processing, electronics, telecommunications, information security, sensors and lasers, and propulsion: 2A290, 2A291, 2B999, 2D290, 3A991, 3A992, 3A999, 3B991, 3B992, 3C992, 3D991, 5B991, 5A992, 5D992, 6A991, 6A996, and 9B990. Additionally, the Rule expands the range of items under ECCNs 3A992, 8A992, and 9A991 included in Supplement No. 2 to part 744.
The Rule adopts a license review policy of presumption of denial in 744.21(e).(7) The Rule broadens the definition of “military end use”(4) by identifying each element of the definition of “use” so that any one of the six elements standing alone, is sufficient.
In addition, the Rule relocates the existing license requirements for items described in a.y paragraph of a 9x515 or “600 series” ECCN to China, Russia, or Venezuela from 744.21 to the license requirements sections of the relevant ECCNs on the Commerce Control List (CCL)(9).
Finally, the Rule expands EEI filing requirements for exports to China, Russia, or Venezuela. The Rule revises 758.1(10) of the EAR to require filing for items destined to China, Russia, or Venezuela regardless of the value of the shipment, unless the shipment is eligible for License Exception GOV. Even if no license is required to ship an item to those destinations, the EEI filing must include the correct ECCN regardless of reason for control. Some exceptions from filing found in 758.1(c) are retained.
Background
On June 19, 2007, BIS published license requirements of certain items intended for military end use in China.(11)
On September 17, 2014, BIS expanded the license requirements to include military end uses and end users in Russia.(12)
On November 7, 2014, BIS expanded these license requirements to include military end uses and end users in Venezuela.(13)
The Rule is effective June 29, 2020.
Contact the professionals at GCSG for more information on this development.
References
Bureau of Industry and Security: “Home Page”
Federal Register: “85 FR 23459-23470” - 4/28/2020. Corrections published 6/3/2020 to include each revised ECCN in full (whereas the 4/28/20 publication only published the revised portions of each ECCN.(3)
Federal Register: “85 FR 34306-34323” - 6/3/2020
Military end use: “The EAR’s current definition of military end use refers both to direct use (for parts, components or subsystems of weapons and other defense articles) and indirect use (weapon design and development, testing, repair and maintenance). This rule broadens the definition of military end use beyond any item for the ‘‘use,’’ ‘‘development,’’ or ‘‘production’’ to include any item that supports or contributes to the operation, installation, maintenance, repair, overhaul, refurbishing, ‘‘development,’’ or ‘‘production,’’ of military items.”(2) See 744.21(f) for the definition of “military end use”.(7)
U.S. Customs and Border Protection (CBP) Basic Import Export: “EEI” - 1/15/2014
U.S. Census Bureau: “AES” - 2020
eCFR: “15 CFR 744.21”
eCFR: “Supplement No. 2 to part 744”
BIS: “CCL”
eCFR: “15 CFR 758.1”
Federal Register: “72 FR 33646-33662” - 6/19/2007
Federal Register: “79 FR 55608-55615” - 9/17/2014
Federal Register: “79 FR 66288-66290” - 11/7/2014
